IMPACT OF INFORMATION AND COMMUNICATION TECHNOLOGY ON BUSINESS PROCESS MANAGEMENT IN SMALL AND MEDIUM ENTERPRISES SECTOR:

A CASE STUDY

SANUSI FASILAT A & AKANBI TAIBAT A Department of Management and Accounting, Faculty of Management Sciences,

Ladoke Akintola University of Technology, Ogbomoso, Nigeria

ABSTRACT

Due to the numerous advantages of information and communication technology (ICT) , small and medium enterprises (SMEs) are trying to adopt ICT applications to support better performance of their businesses. This paper investigates the impact of information and communication technologies on the business process management in small and

medium enterprises in Ogbomoso Oyo State, Nigeria. Bread bakeries industries formed the sample of the study based on

random sampling techniques. The data obtained through interview and questionnaires were analyzed using descriptive statistical tools such as frequency table, percentage and mean score analysis. The results of the research present the benefits

attributed to the implementation of ICT, such as the increase in productivity of SMEs , increase in sales, advertisement,

fund attraction and market reach. The results of the study recognize that ICT does add value to the business and can give a

company a competitive advantage. Most of the respondents realized a positive performance and other benefits by utilizing ICT in their businesses however, lack of basic knowledge about its use, lack of internal capabilities, lack of financial

support and non availability of infrastructure are the major barriers in adopting ICT. It was then recommended that there is a need for more focus on increasing awareness among SMEs on the benefits of ICT adoption and more training facilities in ICT for SMEs, measures to provide ICT products and services at an affordable cost, and availability of professional

advice at reasonable cost to SMEs.

KEYWORDS: Information and Communication Technologies, Business-Process, Small and Medium Business. Bakery Industries, Ogbomoso, Nigeria

INTRODUCTION

In this 21st century, e-commerce is emerging globally, in much the same way as national markets evolved from

local and regional networks. The modern economic environment which is dominated by globalization, hyper-competition,the knowledge and information revolution has revolutionized the way business is conducted [1]. This new technological epoch is apparent through intensified investment in computer-processing and data preparation

appliances in the manufacturing and service industries, telecommunications infrastructure and wide spread usage in all

private sectors, public sectors and, more recently, in the household. In view of this technological progress, the implementation and application of information and communication technology (ICT) is a significant driving force behind many socioeconomic changes [2]. As the usage and commercialization of information and communication technology becomesmore widespread throughout the world, the adoption of novel information and communication technology can

generate new business opportunities and various advantages.

Small and medium enterprises (SMEs) in Nigeria embrace important role within national economy. This role is potentially influenced by the recent rapid changes of information and communication technology [3].Among the area of

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14 Sanusi Fasilad A & Akanbi Taibat A

weakness of small and medium enterprises in Nigeria deal with market orientation, human resource quality, technological

mastery, market access, and capitals. However, one of the weaknesses is related to the aspect of information and communication technology application. The application of the technology within industries will be commenced by the use

of such technology by individual. To put into consideration that the key individual in small and medium enterprises is the

owner of the small and medium enterprises, therefore the intensity for the use of computer technology by the owner of

small and medium enterprises is assumed to give influence toward the intensity in the use of computer technology by the organizations or industries.

The owners of industries are the most significant individuals in determining the organizations directions and

policies, including the use of computer technology. [4]shows that there is a close relation between the owner of small businesss perception with the computer system and the actual use of such computer system. Meanwhile, small and medium enterprise key character as the end user of information technology tended to put its attention to computer self-

efficacy, that is aspect of training and ability in using computer system [5].

As pointed out by [6], in the small business domain, information and communication technology would prove to be invaluable in tracking customer orders, correspondence, delivery and payments. [7] has correctly pointed out that in todays global economy even the larger high-technology companies are finding that technical leadership, by itself, is not

enough to meet global competition. The most important factor seems to be the ability to deliver a quality product, on time,

at a competitive price, anywhere in the world. According to [7], in this electronic arena, small and large companies alike can combine appropriate resources from anywhere in the world to reach target markets anywhere.

Though, the application of information and communication technology in small and medium enterprises is not

easy, especially if it is related to the weaknesses found in the management of small-scale businesses. The main problem is

due to the prior perception that information and communication technology is expensive and complicated to be utilized by the small-scale entrepreneur. The second problem is the unavailability of the information technology infrastructure that

does not support the implementation of information and communication technology. The last problem concerns with the

educations and skills of the human resources in using the information and communication technology.

Small and medium scale enterprises have varying definitions and have been a major player in the Nigerian economy, especially as the largest provider of an employment, and the primary or secondary source of income for many

households. SME includes a variety of fields such as agricultural, trade, processing, services and many more. In Nigeria,

SME sector is often associated with social and economic problem like high levels of poverty, unequal income level and

unemployed.Small and medium scale enterprises have been long recognized as an instrument of economic growth and development. This growing recognition has led to the commitment of World Bank group on small and medium enterprises

sector as core element in its strategy to foster economic growth, employment and poverty alleviation. The importance of

small and medium scale enterprises has not been in doubt; unfortunately classifying businesses into large and medium

scale is subjective and premised on different value judgment. Small and medium enterprises have a narrow context within which its operation is carried out. However, where it is effectively operated it has capacity to sprout the economic growth

and national development. In every economics small and medium enterprises has been seen has a pivotal instrument of

economic growth and development for developing economics [8, 9, 10].

The main focus as an issue of much apprehension to entrepreneurs, scholars and practitioners in developing economy like Nigeria is information and communication technology impact on improve in productivity and performance

on small and medium enterprises.

Impact of Information and Communication Technology on Business Process Management in Small and Medium Enterprises Sector: A Case Study 15

The use of information communication technology to improve productivity and performance is one of the

challenges being faced by small and medium enterprises presently in developing country due to the lack of knowledge on the benefit of information communication technology in their businesses. However, globally, there is the need for changing

roles of small and medium enterprises operation to meet the global challenges. Information communication and technology

is expected to improve small and medium enterprises operation performance in a form of transactional convenience, saving

of time and quick transaction.

Hence, more research works need to be emphasized on information communication technology and the operation

performance of small and medium enterprises in order to discover how small and medium enterprises can be benefited

much more from information and communication technology. More studies in Nigeria focus on information technology

adoption and usage in the financial sectors. However, the main objective of this study is impact of information and communication technology on business processing management in small and medium enterprises sectors using bread

bakery industries in Ogbomoso area of Oyo State Nigeria as a case study.

METHODOLOGY

The study area was Ogbomoso, Nigeria; achoice based on its considered location as one of the commercial area in

the state. Ogbomoso is a town with unique features and is expanding its small industrial base, especially many roads that link to several rural areas surrounding the town. Moreso, education (LAUTECH) and health facilities (LAUTECH and BOWEN Teaching Hospital are expanded to rural and remote areas. To achieve our objective, both primary and secondary source of data was employed in this work. Primary source of data was basically interviews and administering of

questionnaires to retrieve information from the selected bakery industries in the area of study.

The questionnaires which were administered to the industries provided wide range of options for them to choose

from. Simple random sampling was applied to select sixty (60) commercial bread bakery industries as the target population for this study. Likert five point scales ranging from 1-5(1=strongly agree and 5=strongly disagree) were used as a basis of the questions. Secondary source of data for the study include textbooks, business articles and journals, the internet. The analysis of data obtained was carried out with particular reference to the research questions using descriptive statistical

tools such as frequency table, percentage and mean score analysis.

FINDINGS AND DISCUSSIONS Workforce Knowledge

All the respondents interviewed have a workforce within the required range as discussed in the definition of small

and medium enterprise in introduction section. The number of employees ranges from twenty (20) up to one hundred and twenty (150). While 45% of the respondents had academic qualification ranging from Junior Secondary School Certificate (JSSC) to ordinary national Diploma (OND), 3% had First Degree and higher. The ranging 52% are either primary School leaver or not attended any level of education. The problem is that eight out of the respondent indicated that their employees

are not complete literate.

Benefits of Information and Communication Technology

The ranking of the benefits of information and communication technology in table 1 are improvement in

productivity, increase in sales,widen market reach, funds attraction and marketing. Some information and communication

technology software can assist inimprovement of productivity, efficiency of inventory controls, and increase sales through online sales orusing mobile phone for faster delivery service. With the help of information and communication technology,

16 Sanusi Fasilad A & Akanbi Taibat A

business become visible and easier to be reached and the market can be accessed by the general public locally and

internationally. Once the company make its profile visible, can be easily reached and accessed by opening its own website, the business gains market recognition by the public. Fund attraction with visible company profile and its well recognition,

banks are more willing to raise or give loans to the company.

Table 1: Benefits of Information and Communication Technology

Benefit Market reach Marketing Increase in sales Fund attaraction Productivity improvement

SPSS Valid Percentage Scores Severity Index Percentage Rank 1 2 3 4 5 (SI)% 7 7 7 13 67 85

10 10 13 17 50 79 10 13 10 17 50 77 13 17 17 20 33 69 17 27 27 17 13 56

Factors that Influence the Adoption of Information and Communication Technology

The factors that motivate firms to adopt information and communication technology system ranked applying the

formula for severity index (S.I). The influence of each factor was access by the respondents on rating scale ranging from 1= very weak to 5very strong.

The factors advertisement, customer request and level of competition were rated by the respondents, the response

frequencies (f) were obtained for very weak, weak, average, strong and very strong , the valid percentages and the severity index (SI) were calculated for the respective rating scale are shown in the table 2. The results show that advertisement is the most important factor, followed by customer request, while the level of competition is the least. This suggests that increasing in level of advertisement (awareness) will increase the rate of information and communication technology adoption in the Bakery Industries, which in turn will increase the sales growth of the market.

Table 2: Factors that Influence the Adoption of Information and Communication Technology

Factors Awareness customer Customer Demand level of competitive

SPSS Valid Percentage Sources Severity Index Rank 1 2 3 4 5 (SI)% 3 7 7 13 70 88 17 27 27 17 13 56 10 10 13 27 40 54

Information and Communication Technology Skills

The study was trying to examine the information and communication technology skills of small and medium enterprises owners in Bakery industries in Ogbomoso area. The results in table 3 show that the owners skills are quite poor

i.e. below average.

Table 3: The information and Communication Technology Skills of SME Owners

N Minimum Maximum Mean Standard Deviatiom Basic skill 35 0.8 1.0 1.5 1.0 E-mail 35 0.8 1.5 1.6 1.2 Mobile Phone 35 0.8 2.5 2.0 1.4 Internet sevice 35 0.8 1.8 1.8 1.3 A.T.M 35 0.8 2.0 1.8 1.4

Note: 1 = very poor; 2 = poor; 3 = average; 4 = good; 5 = excellent

Impact of Information and Communication Technology on Business Process Management in Small and Medium Enterprises Sector: A Case Study 17

Information and Communication Technology Use in the Workplace

For information and communication technology use in the workplace, respondents were asked to indicate how often they use the internet service, A.T.M, mobile phone, and e-mail at work. As shown in table 4, it is seen that the

respondent rarely used the internet service, A.T.M, phone and e-mail at their workplace.

Table 4: The Mean Score for Information and Communication Technology Use at Workplace by Sme Owners

N Minimum Maximum Mean Standard Deviation Internet Service 35 0.6 1.5 1.6 1.3 A.T.M 35 0.6 1.2 2.0 1.4 Mobile Phone 35 0.6 1.0 2.2 1.3 e-mail 35 0.6 1.4 1.8 1.5

Note: 1 = never; 2 = rarely; 3 = not sure; 4 = often; 5 = always

Challenges to Information and Communication Technology Usage

The respondents gave different barriers that prevent them from implementing information and communication

technology, ranging from socio-economic issues to technology-related issues. Erratic power supply is the important

constraints to widespread adoption of information and communication technology, financial constraint, lack of knowledge

and possibility of fraud, technology intimidation and high cost of information and communication technology. The listed problems are very much in line with the literature with the addition of power cuts as a new problem that is probably unique

to Nigeria. However, most of the barriers could possibly be overcome by learning more about information and

communication technology and by small and medium enterprises employing knowledgeable information and

communication technology staff.

Conclusion and Recommendation

Based on our findings from the study, it is showed clearly that information and communication technology plays

an important role on the business process management in small and medium enterprises by improving its productivity and economic activities. It is revealed from the study that Level of awareness is the main factor that influences the adoption of

information and communication technology by the small and medium enterprises. Moreso, among other benefits of using

information and communication technology is increase in Productivity, which lead to more sales and increase in profit, the

business is opportune to sell in a wide range of market thereby gain more customers, Banks and other financial creditors are willing and able to give credit facilities and lastly, by using information and communication technology as a medium of

advertisement. Although most of the bakery industries find the internet service, e-mail, mobile phone and ATM as

important tools but they do not use them in their business because of certain constraints and challenges like lack of

knowledge about its usage, lack of financial support, no availability of infrastructure more importantly power.

The study concludes that Information and communication technology positively impact on the performance of

small and medium enterprises operation in Nigeria thereby influence the level of economic activities in Nigeria as a whole.

Nigeria, like many developing countries relies on small and medium enterprises to reduce unemployment and to contribute

toward the growth of economy. Research into how information and communication technology can enhance small and medium enterprises in order to keep them competitive and sustainable in the knowledge economy is at the top of many

governments agendas around the globe, it is therefore recommended that there is need for further research to assess the

competition created by organizations adaptation of information and communication technology and whetherinformation

and communication technology adaptation by business can increase the quality and design of a product. Finally, extensive research can also be conducted on the risk management on small and medium enterprises adopting information and

18 Sanusi Fasilad A & Akanbi Taibat A

communication technology.

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